Wisconsin Returns Stimulus Funds to NTIA, Award Was Going to AT&T Anyway

The story about Wisconsin becoming the first state to return broadband stimulus funds has circulated quite quickly over recent days. The state, which is one of several to have recently swung far more conservative than it traditionally is, has returned other stimulus funds unrelated to broadband as well. In this case, they were apparently surprised at the previously well-publicized terms of the award for which they applied:

State officials are returning $23 million to the federal government, saying there were too many strings attached to stimulus money that was supposed to be for expanding high-speed Internet service in schools, libraries and government agencies.

We previously noted efforts by a few legislators to meddle in a different project to preserve AT&T's monopoly on providing over-priced services to schools and community institutions in part of the state. This is different, but related as Wisconsin has made it very difficult for the network used by the University of Wisconsin to be owned by the University, a gift to AT&T that just keeps on giving. Because the stimulus funds would have been given to AT&T to expand the network, the University would have to continue using that network for the 22 year period required under the conditions of the award. But the contract with AT&T is only for 5 years -- so Wisconsin complained about "strings" attached to the award. Stop the Cap! has published an excellent research piece covering various facets of this story.

Currently BadgerNet largely exists as an extension of AT&T’s network in Wisconsin. That is a critical point. Had BadgerNet initially been created as an independent entity, today’s stimulus rejection might never have happened. Wisconsin, no doubt at the behest of AT&T, built its network with a leasing arrangement, signing five-year term contracts to rent space on AT&T’s fiber-copper wire facilities. That kept initial construction costs down, and allows the state to theoretically “walk away” from part of the network if something better comes along — a highly unlikely proposition in a state like Wisconsin. It’s not an economic leader and has large numbers of rural counties competitors would be unlikely to serve. Wisconsin Republicans call this arrangement with AT&T a “public-private partnership.” Democrats call it a giveaway to AT&T, and BadgerNet officials call it one big fat headache.

When you don't own the network, you are reduced to begging for improvements. This award should never have been made and we are fortunate that Wisconsin returned it rather than having our tax dollars go to AT&T's shareholders. I feel for the folks in Wisconsin who are stuck with schools and libraries with subpar connections (for which they undoubtedly overpay AT&T), but it makes no sense to encourage the continuation of such an inefficient approach. Meanwhile, other states are also using their power to pass laws aimed at strengthening the power of the most powerful telecom companies to the detriment of competitive forces, perversely in the name of creating new jobs. NJ looks likely to further deregulate telecom companies despite the negative correlation of deregulation to increased competition. And we have been digging into the latest TWC travesty to protect its monopoly in North Carolina.